The 53-year-old was given his marching orders at a board meeting on Saturday evening after the Blues' losing run was extended to a fifth game.
Confirming earlier reports of Cotterill's dismissal, Birmingham placed on record their gratitude for his "significant contribution" last season when playing a part in the club's push for survival in his role as assistant manager.
As part of the latest shakeup at St Andrew's, a number of others have also been left out of work.
"The club regretfully confirms that it has this evening parted company with manager Steve Cotterill," a statement on City's official website read. "Steve's contract, and those of the backroom staff – first team coach Paul Groves, first team coach Paul Williams, goalkeeper coach Kevin Hitchcock, director of football Jeff Vetere, David Alvarez (head of sports science and medical) and Albert Altarriba-Bartes (first team strength and conditioning coach) – have been terminated with immediate effect.
"This course of action is taken with great regret and sadness. The board would like to place on record their sincere thanks to Steve, not only for his significant contribution at the conclusion of last season for which we will remain grateful, but also for his genuine efforts, contribution and hard work during his tenure in this 2017-18 campaign.
"Steve has conducted himself professionally on behalf of the club at all times, his work ethic and honesty are a credit to him and there is a genuine sadness at this decision. However, the board feel that a change in management at this stage is in the best interests of the football club.
"We sincerely thank Steve and all the exiting backroom staff for their efforts and wish them all the very best for the future. A replacement manager and backroom staff will be confirmed in due course."
Birmingham, who return to action on Tuesday night with a home match against Middlesbrough, are currently two points adrift of safety.